Tax liability on staggered investment in Debt fund ?

POSTED BY vaidup ON February 20, 2014 1:00 pm COMMENTS (9)

Hi

If I make lump sum investments into a debt fund each year for a period of three years and redeem the whole amount in the forth year. How will my tax liability will be calculated?

Upender

9 replies on this article “Tax liability on staggered investment in Debt fund ?”

  1. vaidup says:

    Thanks Ashal!

  2. ashalanshu says:

    Dear Upender, please invest the amount into the fund you are already invested in – HDFC STP.

    Thanks

    Ashal

  3. vaidup says:

    Thanks Ashal.

    I can understand that I have choice of liquid fund or short term debt fund. Firstly, I am bit confused what benefits short term debt funds have because they are also giving 9-10% return similar to Liquid funds and both have same tax treatment for more than 1 year period.

    Secondly, I already have a debt fund HDFC Short Term Opportunities, would you suggest put surplus in the same fund or put surplus funds into a new ST debt fund.

    Your advice and help is much appreciated.

    Regards
    Upender

  4. ashalanshu says:

    Dear Upender, please invest the amount in short term debt funds.

    Thanks

    Ashal

  5. vaidup says:

    Hi Ashal,

    I do not have an immediate use of these funds sitting in savings account at least for min 2-3 years. As I mentioned earlier, I have around 20 Lacs in FDs. I have EPF (15 Lacs), PPF (3Lacs) and hope I will have enough funds through EPF, PPF for my retirement 15 years from now as I am continuing to invest there.

    For my other goals, children education and their marriage etc, I have recently started SIPs about 20K month in 3 different equity diversified funds and currently have 6 lacs in mutual fund portfolio in debt and equity funds. I even think of starting some more SIPs.

    The surplus funds in savings account are in addition to all investments that I have. I am relatively new to financial planning and after reading two of Manish’s books I realised that my money sitting in savings accounts is actually loosing its value due to inflation. That’s why I want some help here. The investment I look for should be able to at least beat the inflation and not too risky to loose money. The books by Manish have lifted the veil of ignorance from my eyes and I want to sensible action with my money.

    Will appreciate any guidance you can provide.

    Regards
    Upender

  6. ashalanshu says:

    Dear Upender, how do you want to use this amount? What is your goal? What is your time frame? What is your return expecation?

    Thanks

    Ashal

  7. vaidup says:

    Hi,

    I have surplus money sitting in savings accounts. Where will it be best to put that into – an FD or debt or equity fund? I already have significant number of FDs. If I go for SIP route to invest in equity. It will take much longer to invest. Pls suggest how and where to invest this money? I fall into 30% tax bracket.

    Upender

  8. ashalanshu says:

    Dear Upender, the LTCG witrh indexation ‘ll be available for MF investment completed more than 1Y. Any investment which is less than 1Y old, ‘ll be counted for STCG.

    Indexed LTCG ‘l be taxed @ 20.6% where as STCG ‘ll be taxed @ your slab rate.

    Thanks

    Ashal

    1. vaidup says:

      Thanks Ashal!

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